Whether you are a new resident of Canada or a non-resident, there are plenty of opportunities to create a new business or bring your existing foreign corporation from outside Canada into Canada. When you are looking to establish your business in Canada, you will want to learn more about Canada Revenue Agencys business and corporate tax filings, including income tax rates.
Below is more information about Canada Revenue Agencys tax rules and filing your tax returns accurately. It includes some tips for residents of Canada and newcomers to Canada to help navigate the Canadian tax system. For any specific details about how to pay corporate taxes, you can contact an accountant, tax preparer or Revenue Canada directly at 1-800-959-5525.
Creating a Business Plan
Before starting a business, regardless of your resident status, it is important to go through the process of completing a business plan to ensure you have calculated the risks, costs and requirements to be a successful business owner and operator. We have included a business plan guide provided through the federal government which is available to you in 10 different languages. Once your business is set up you would need to create a marketing plan to ensure customers looking for your product or service can find your business. Intuit QuickBooks has a helpful marketing plan template that you can access here.
Canadian taxes for business will vary and will be filed differently, depending on how the business is registered. Provincial and Territorial tax rates can also vary between jurisdictions.
Does my small business need to file a tax return?
If you are registering a business in Canada that is not an incorporated company, the taxation from the business is listed as your personal income earned and filed with your personal tax each year. It is important to maintain accurate records of the revenues generated from the business and the expense costs to operate the business. The basics of business taxation for an individual who operates a small business is that your net income is based on the business income revenues subtracted by the expenses to get your taxable income.
How can my corporation file Corporate Tax returns?
Corporations in Canada file and pay corporate taxes separate from the individuals who own the corporation. If you have decided to incorporate instead of registering a business in Canada, taxation begins with the revenues minus expenses for the corporation separate from the individual. The individual taxation is solely based on the money you move from the corporation to the individuals who operate the business. A Business Number Registration is automatically generated by Revenue Canada when a corporation is created. This is the corporate tax number that essentially acts as a SIN for a corporation for income tax purposes. With a corporation, there may be potential business deductions and other benefits and credits you can take advantage of.
When operating a business in Canada, the business owner is responsible to charge, collect and file tax returns for their business operation. When operating a business, there may be federal, Provincial and Municipal taxes that will have to be paid.
HST – Harmonized sales Tax
If your business gross sales are $30,000.00 or more per year from a business anywhere in Canada, you are required to set up an HST account with Revenue Canada. This is a tax that is charged to your customers for services or products provided. Provinces and Territories each have a different applicable tax.
Here is a chart with the applicable taxes, depending on the Province or Territory your business resides within.
|Newfoundland & Labrador||15%|
|Prince Edward Island||15%|
Hiring Employees and Payroll
If you are starting a business but do not have employees, you are not required to set up a payroll account until you hire your first employee. Once you are ready to hire an employee or if your business starts by requiring employees to assist you with operating your business, you are required to set up the payroll account.
This is also done through Revenue Canada at no cost or we can set up this account for you.
If you wish to register the payroll account yourself, here is the link to do so.
It is important if you are hiring employees to understand the regulations and requirements to follow as an employer. This includes items such as minimum wage, hours of work, public holidays and other related obligations.
Each Province has a different set of requirements. The requirements of each Province we offer business registrations for are available directly through the Provincial regulations and can be reviewed by the applicable link to where your business will exist:
Import & Export Licencing
According to Statistics Canada, there are over 50 billion dollars worth of imports coming into Canada each month. Newcomers to Canada bring their culture, language, food. Many import goods from their home countries. Canada is very fortunate to have immigrant entrepreneurs who import the very best of their goods to the Canadian marketplace.
If part of your business activity is to import or export goods to and from other countries, you are required to register an import-export licence in Canada. There are special licensing requirements if you are important such goods such as food, tobacco and consumer products along with applicable duties and tariffs.
The government of Canada provides information related to importing and exporting regulations, licensing and restrictions. This website should assist you with questions you have relating to importing and exporting within Canada.
There are a number of opportunities that immigrants to Canada can engage in both before and after they have moved to Canada. All businesses, whether small business registrations or incorporated businesses will have to file an annual income tax return, but there will be differences in how those tax filings are completed depending on how the business is registered.
For more information about how to file business income tax or how to pay corporate taxes, Revenue Canada provides a number of online resources.
When you are ready to register your business or incorporate, Ontario Business Central can assist with completing the business registration as well as with any Revenue Canada accounts needed.
Registering a business is simple with the help of Ontario Business Central.
Why use our service?
Ontario Business Central has been the trusted source for more than 25 years for entrepreneurs to get their small business or corporation started. With an A+ rating from the Better Business Bureau and over 170,000 clients served, we are in the business of helping you create your business and making the process as easy and fast as possible. If you have any questions, please feel free to reach out to our helpful and friendly staff.
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Ontario Business Central Inc. is not a law firm and cannot provide a legal opinion or advice. This information is to assist you in understanding the requirements of registration within the chosen jurisdiction. It is always recommended, when you have legal or accounting questions that you speak to a qualified professional.